Tesla (TSLA) stock has recovered rather significantly in recent months, but the derivatives market believes that momentum will only accelerate after the company reports earnings on October 21st.
Consensus estimates for the EV maker’s profit and revenue currently sit at $0.44 a share and $28.3 billion, respectively – indicating a 12% and less than 1% decline on a year-over-year basis.
Despite recent gains, Tesla shares remain down roughly 14% versus the start of this year (2026).
Options sentiment is bullish for Tesla stock
Despite the anticipated YoY decline, traders are increasingly betting on call options, which signals conviction in a potential post-earnings surge in TSLA stock.
In fact, the put-to-call ratio on contracts expiring end of this week sits at 0.47 currently, whereas a reading below 1.00 is typically characterized as in favour of the bulls.
According to the latest data from Barchart, the upper price on those options contracts is currently set at $397, indicating potential for a nearly 6% rally on the back of the quarterly release.
Even from a technical perspective, Tesla is currently trading well above its major moving averages (MAs), with an RSI in the mid-50s signaling significant room before the EV stock hits overbought conditions.
Why are options traders bullish on TSLA shares
The derivatives market remains constructive on Tesla shares irrespective of the expected weakness in the company’s Q3 results primarily because its valuation is now tied more to the AI initiatives.
While the Nasdaq-listed firm continues to face challenges in its core EV business, the stock price trajectory is broadly expected to be defined by billionaire Elon Musk’s commentary involving AI and autonomous driving.
The positive options market sentiment heading into the earnings release likely reflects confidence that updates on that front will be constructive on October 21st.
Last week, TSLA unveiled its much-anticipated “roadster” vehicle, which may help sustain momentum in the sessions immediately after earnings as well.
Cathie Wood dubs Tesla Inc a 10x opportunity
The aforementioned AI and autonomous initiatives are keeping influential investor “Cathie Wood” bullish on Tesla Inc as well.
In her latest report, the founder and chief executive of ARK Invest said the EV stock will be worth $5,000 within the next six years, indicating potential for a 10x growth through 2031.
Wood remains convinced that humanoid robots and robotaxis are a trillion-dollar opportunity that Tesla Inc is uniquely positioned to capitalize on in the years ahead.
That said, Wall Street analysts are nowhere near as bullish on TSLA shares for the next 12 months.
According to Barchart, the consensus rating on the electric vehicles specialist sits at Moderate Buy as of writing, with the mean price target of about $401 indicating potential for roughly 7% upside only.
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